TN Labor chief's career rose fast, then tumbled

May 5, 2013

Tennessee Department of Labor and Workforce Development Commissioner Karla Davis, left, talks with Gov. Bill Haslam between sessions of a public hearing on budgetary policy in 2011. Davis led the department from January 2011 to March 2013. / File / The Commercial Appeal

At 44, just five years after moving to Tennessee, the Chicago transplant held a position many might covet — commissioner of a major state agency. The job brought with it a six-figure salary, a staff of 1,500 people and oversight of a $220 million budget.

Davis, who is black, brought diversity to a position that previously tended to be held by white businessmen and labor leaders. Still, her résumé carried little to suggest she would become the leader of the Tennessee Department of Labor and Workforce Development.

How Davis, a little-known nonprofit administrator, could be named to lead a major state agency says much about how Gov. Bill Haslam has structured his administration. His twin emphases — bringing in fresh blood and building a diverse cabinet — have helped him shake up state government.

But in a couple of cases, the governor has put people in charge who critics say lacked the experience or skills to run state departments. Davis, who resigned in March, citing family reasons, left shortly before the release of a scathing audit of her department. In addition, the department is facing at least three wrongful-termination lawsuits, including two that allege racial discrimination.

Race and gender appear to have been factors in Davis’ hiring. But she also convinced the governor himself that she was the right person for the job, shining in interviews and enduring a lengthy vetting process.

“Karla was bright,” Haslam said, “and she had been working with enough folks in situations like the people our Labor and Workforce Development Department serves that I thought she could add some value.”

Davis’ time in Tennessee may have been short, but she appeared to make the most of her opportunities before joining the administration.

According to her public profiles, Davis attended Spelman College but received her bachelor’s degree in bioengineering closer to home from the University of Illinois at Chicago, a commuter school just west of the Loop. From there, she took a job with the U.S. Environmental Protection Agency, eventually rising to become a project manager overseeing environmental justice efforts in the six-state Great Lakes region.

Davis’ husband, Terence, is a Memphis native whom she met while he was a student at Northwestern University. The couple moved to Tennessee when she was hired to lead a new nonprofit, Urban Strategies Memphis HOPE.

The organization is a shared venture between St. Louis-based Urban Strategies Inc., the Memphis Housing Authority and the Women’s Foundation for a Greater Memphis. It focuses on helping residents of two redeveloped Memphis housing projects fit into mixed-income neighborhoods.

Coming from the EPA, Davis was not an obvious choice, said Sandra M. Moore, Urban Strategies’ president. But Davis convinced Moore and the rest of the selection panel that she had the project leadership, management and communications skills needed to lead Memphis HOPE.

“From the moment she walked into the interview, it was clear to us,” Moore said.

Once in Memphis, Davis quickly expanded her professional network. In 2009, she took part in the Leadership Memphis program and she was appointed by interim Mayor Myron Lowery to the Memphis City Beautiful Commission. Davis also earned slots on the Shelby County Families First Advisory Council and the Tennessee Local Workforce Investment Area 13 Youth Council.

But many of those who worked with Davis on those boards and commissions remember little about her. They described her as bright, but none said she stood out from the crowd.

'She was qualified'

Still, Davis’ name made it onto the list of candidates for positions in Haslam’s cabinet. Tom Ingram, the head of Haslam’s transition team, said the governor was looking to assemble a diverse group for his administration but added Davis had to clear several rounds of interviews, including one with Haslam directly.

“She was highly recommended or she wouldn’t have been in it,” Ingram said. “Did she meet our diversity criteria? Absolutely. Was that the reason that she was appointed? Not unless we thought she was qualified.”

Moore, however, said she was floored to find out Davis had been selected to lead the Department of Labor and Workforce Development. The position requires the ability to choose leaders and delegate on a scale far larger than what was needed at Memphis HOPE.

But Moore, who led Missouri’s labor department herself during the administration of Gov. Mel Carnahan in the 1990s, came to understand the logic.

“I thought, she had the basic skills and, for us, she was a hard worker,” Moore said.

Davis was unknown to many in Nashville. She acknowledged as much in an introductory message published in January 2011 in a Department of Labor and Workforce Development newsletter.

“I’m no stranger to our state,” she wrote. “I know a bit of what you do from my practical experience.”

As in the case of Kate O’Day, the Department of Children’s Services commissioner who stepped down in February, questions began to emerge last year about whether she was up to the job.

Davis inherited a department still struggling with the spike in unemployment caused by the Great Recession. Worse, the department lacked the up-to-date computer systems needed to process requests for unemployment insurance payments and track potential fraud.

Those problems combined to create a backlog of more than 10,000 claims that forced some unemployed Tennesseans to wait as long as 10 weeks to receive benefits. In August 2012, only 48 percent of those whose claims were approved began receiving checks within two weeks; even at the height of the recession three years earlier, that percentage only dipped as low as 77 percent.

The department also made more than $73 million in fraudulent and improper payments, including some to people who were dead, incarcerated or working for the state, over a period of six years, according to the state audit.

Davis responded to the department’s problems by reorganizing. Don Ingram, head of the division that distributes unemployment benefits, left in October and then sued, claiming Davis and her deputies had driven him and other long-time employees off to clear the way for African-American replacements. Another official, Annie Hendricks, made a similar allegation in a separate lawsuit filed in November.

Davis could not be reached for comment. Messages left at a Cordova phone number listed as her husband’s were not returned.

(A third wrongful-termination suit alleged the department did not follow civil service procedures; it has been dismissed.)

'Kind of unfortunate'

Robert O’Connell, executive director of the Tennessee State Employees Association, said the allegations of discrimination are especially unfortunate, coming from a department that is supposed to encourage proper hiring practices.

“You certainly hope she hasn’t come in and let a bunch of people go ... so she could bring in a lot of other people of another race,” he said. “Who wouldn’t deplore that?”

O’Connell said Davis’ experience with the EPA and working with housing authorities in Memphis should have given her some preparation to work in state government. But he criticized the governor’s belief that private-sector principles always apply to the public sector and questioned why Haslam seemed so inclined to hire people from outside.

“It’s just kind of unfortunate that people who have been around don’t get more of a shot,” he said.

While not disputing the criticisms of Davis and O’Day, Haslam defended how he had assembled his cabinet.

“We have 23 commissioners, and of those, 18 or 19 are from outside state government,” he said. “We’ve had some commissioners that were incredibly successful.”

But the governor added that the task of naming senior leaders was harder than many might think. He said there is little time for an incoming governor to find the right people for every position, contrasting it to the deliberate way in which people are chosen by private businesses.

“You basically have 30 really critical positions to fill and you have a very tight window to do that,” he said. “If I’m hiring somebody for a business, I know what that existing department that I’m hiring them to run is like. ... You don’t have that advantage when you’re coming into state government.”